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Grain Supply Update: Oct. 1, 1996
Grain Supply Update: October 1, 1996
© Geri Guidetti, 1996
USDA Reevaluates Corn, Soybean Stockpiles
Yesterday, the Agriculture Department released a report in which
it raised its estimates of U.S. corn and soybean stockpiles. Instead of
last month’s estimate of 409 million bushels of corn available in the
supply chain, it now estimates there were still 426 million bushels left
on September 1. In addition, forecasts for warmer, drier weather in the
late-planted Midwest corn belt and a diminishing chance of an early fall
frost have raised prospects for a decent harvest this season. As a
result of the new estimate, the price of corn targeted for December
delivery dropped to $2.9675/bu in the Chicago trading pits, nearing a
yearly low of $2.955. You may recall that corn prices hovered around
$4.00 a bushel as word of dangerously low supplies and the real
possibility of running out of corn hit the markets this season.
Is this report reason to cheer? Is the potential for a shortage in corn
and all of the food industry "dominoes" (cattle, poultry, sweeteners,
etc.) dependent on corn, over? Is the market’s optimism warranted?
Take a closer look at the 426 million bushel figure. Even if this
higher, revised figure is correct, this stockpile is the smallest U.S.
stockpile since 1976. In fact, it is 72.7% lower than last year’s
mediocre figure. If a decent harvest is realized this year, it will not
serve to build up the stockpile to levels anywhere near those analysts
admit are essential for food security.
Soybean harvests are beginning this week. As you already know,
much of the nation’s soybean crop was planted late in major Midwest bean
fields. Many of these were planted as replacements for failed corn.
Warm, dry weather predicted this week should help those beans still
behind to mature. This would be a good break. The USDA had most
recently estimated ending soybean supplies, before this year’s harvest,
at 170 million bushels. Yesterday it estimated there were 183 million
bushels left on Sept. This is still 20 million bushels higher than most
trade analysts estimate. Soybeans targeted for November delivery
dropped over 25 cents yesterday, to $7.58/bu. You will recall that
soybeans were hovering around the $8 mark this season. Again, one must
ask if the new estimates and optimism over weather prospects change the
big food picture.
A close look at the global grain carryover stocks – those stocks
available to feed this nation’s and the world’s peoples until the
following season’s harvest – is sobering. According to 1994 data from
the USDA, since 1987, the world’s grain and feed stocks have been drawn
down dramatically despite intensive agricultural efforts to reverse the
trend. Some numbers: The all-time high for grain carryover was 465
million tons in 1985. This was the equivalent of a 104 day global
supply. Over eight years grain supplies were reduced to 302 million
tons a year. The annual depletion actually exceeded the harvests during
these years. In other words, the world’s growing consumption of grain
since 1987 has been fueled by eating what was in storage from previous
years’ harvests. As of 1995, the global grain stocks were down to 59
days of consumption. This year, 1996, corn stocks alone were down to 48
days.
The complete picture will not be in until well after this
season’s harvests are finished. Despite the USDA’s new estimates and the
markets’ malarial responses, the sad truth is the world is only one
poor growing season away from serious food deficiencies. And, no, such
a poor year will not limit suffering to Third World countries. Given
the recent and predicted ten more years of extreme weather patterns, it
would be prudent to rethink our nearly total dependence on traditional
food supply and delivery systems…Geri Guidetti, The Ark Institute
***********************************************************************Build Your Ark! How to Prepare for Self-Reliance in Uncertain Times:
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